For the first time in over three years, existing home sales continued to grow for back-to-back months. According to the National Association of REALTORS® (NAR), May's 2.4 percent gain can be attributed to greater housing affordability throughout the country, and the first-time buyer tax credit. The last such consecutive monthly increase occurred in September 2005. Housing analysts have revised their forecast and are predicting existing home sales volume of 4.77 million units for 2009, up from the 4.66 million units projected in April.
NAR chief economist Lawrence Yun has been predicting the improvement. "Historically low mortgage interest rates clearly drew buyers into the market, and housing remains very affordable even with a recent uptick in rates,” he said. “First-time buyers also are being drawn off the sidelines by the $8,000 tax credit, which is helping to absorb inventory. However, the increase in sales is less than expected because poor appraisals are stalling transactions. Pending home sales indicated much stronger activity, but some contracts are falling through from faulty valuations that keep buyers from getting a loan.”
A NAR survey reports that first-time home buyers accounted for 29 percent of transactions during the month of May. Buyer activity is up across the board, too, as the number of home buyers in May was 10 percent higher than at the same point a year ago. “This is the time of year when we see large increases in the number of repeat buyers, who are benefitting from sales to entry-level buyers,” Yun said. “Investors appear less active, but are more prevalent in areas with large price corrections.”
Freddie Mac reported that the average commitment rate for a 30-year, conventional, fixed-rate mortgage is at 4.86 percent for the month of May; the rate is down from 6.08 percent in May 2008.